Correlation Between Apple and WesCan Energy

Can any of the company-specific risk be diversified away by investing in both Apple and WesCan Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Apple and WesCan Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and WesCan Energy Corp, you can compare the effects of market volatilities on Apple and WesCan Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Apple with a short position of WesCan Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and WesCan Energy.

Diversification Opportunities for Apple and WesCan Energy

-0.71

Correlation Coefficient

Apple  WesCan Energy

Pay attention - limited upside

The 3 months correlation between Apple and WesCan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and WesCan Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesCan Energy Corp and Apple is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Apple Inc CDR are associated (or correlated) with WesCan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesCan Energy Corp has no effect on the direction of Apple i.e., Apple and WesCan Energy go up and down completely randomly.

Pair Corralation between Apple and WesCan Energy

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the WesCan Energy. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 3.77 times less risky than WesCan Energy. The stock trades about -0.05 of its potential returns per unit of risk. The WesCan Energy Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8.00  in WesCan Energy Corp on October 12, 2024 and sell it today you would earn a total of  0.00  from holding WesCan Energy Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  WesCan Energy Corp

Apple Inc CDR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

WesCan Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WesCan Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WesCan Energy is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Apple and WesCan Energy

The main advantage of trading using opposite Apple and WesCan Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, WesCan Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WesCan Energy will offset losses from the drop in WesCan Energy's long position.

The idea behind Apple Inc CDR and WesCan Energy Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.